October Survey: FX Volumes in North America Rise 22% in Six Months

The Foreign Exchange Committee (FXC), a multi-national cooperative conducting a semi-annual survey that includes FX data from leading dealers and banks in North America, today issued its 33rd report, which covers October 2020.

According to a New York Fed filing, the average daily volume in total over-the-counter (OTC) foreign exchange instruments (including spot, outright forward, foreign exchange swap and option transactions) was $933 billion in October 2020. This figure was up 5 percent from the ADV metric in the year before, which was reported at $889 billion.

In addition, the average daily volume was 22 percent higher than the $764 billion reported back in the April 2020 survey.

This semi-annual FX survey is taken every six months to provide the market with frequent information on the size and structure of the FX markets in their respective regions.

The uptick in the FX turnover in North America was broad-based and was reported across most currency pairs, instrument types, counterparty types and Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term methods.

One of the primary culprits of the recent rise in October 2020 was attributed to a notable increase in Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term turnover, which came in at $330 billion and thus gained nearly 22 percent since the survey of October 2019.

This was accompanied by another rise in turnover across spot trades by a factor of 4 percent from the previous year, which came in at $372 billion. Additionally, the average daily turnover in OTC options climbed by 24 percent in October 2020.

Meanwhile, the forwards volume was the only loser in this survey, having dropped by 4.6 percent, or $8.9 billion to $184 billion.

Euro, Yen, and Pound Retain Top Positions

In terms of specific FX pairs across the spot market, EUR/USD turnover rose 13 percent in the six months to October 2020, having yielded $85 billion per day compared to $75 billion in October 2019. USD/JPY was the next most commonly traded pair, totaling $46 billion, which is down -8 percent on a year-over-year basis from $50 billion.

Rounding out the top three trading pairs was the GBP/USD, which saw a 10 percent fall in daily volume by 6 percent from $43.6 billion in the 2019 survey, coming in at $38.6 billion.

The Foreign Exchange Committee (FXC) surveys provide market participants with developments in the North America FX market. In conducting the survey, the Federal Reserve of New York provides technical assistance in collecting and processing the data of respective respondents.

Similar surveys are also carried out in the UK, Singapore, Canada and Australia.